Yemen’s War Profiteers Are Potential Spoilers of the Peace Process

Yemen’s War Profiteers Are Potential Spoilers of the Peace Process

Sana’a Center Editorial

Even as economic and state collapse have propelled millions of Yemenis toward famine, the war economy that has developed over almost four years of conflict has also allowed a select cadre of individuals to become incredibly wealthy. These people – many of whom hold the highest positions of authority on either side of the frontlines, and indeed often cooperate with each other across those frontlines – have little incentive to end the war. As such, there is a high likelihood that they will act as spoilers in any peace process, such as that which the United Nations Special Envoy for Yemen, Martin Griffiths, is currently pursuing at talks between the warring parties in Sweden. A successful outcome of any peace efforts in Yemen requires that these war profiteers are taken into account. Measures must be introduced – such as sanctions – to counter these individuals’ incentive and ability to continue the war, or to try to destabilize the country in the event that a peace agreement is signed.

As a year-long Sana’a Center investigation found, perceived adversaries in Yemen’s war have often cooperated for personal profit. Over the past three and a half years, and under the cover of violence and failing diplomacy, complex and fluid networks of corruption have transcended active frontlines. Among the clearest example of this has been the flow of Saudi-led military coalition weapons to Houthi forces. At the heart of this particular money-making scheme are senior Yemeni anti-Houthi military commanders on the Saudi or Emirati payroll. After vastly inflating the number of soldiers in their ranks to receive excess salaries and armaments from their patrons, they then sell their weapons surplus across the frontlines to the same Houthi forces they are meant to be fighting.

The weapons are transported from areas nominally under the control of the government to Houthi-controlled areas through formal and informal corridors, including via desert tracks in Mahra, Hadramawt, and Shabwa governorates. This requires local, expert knowledge of the terrain, and many greased palms along the way. Ultimately though, as long as each party is paid their share – from arms dealers to those driving the trucks and individuals stationed along the road manning checkpoints – then arms sales run smoothly, no matter the destination..

These networks of corruption extend beyond Yemen’s borders. A telling example is the prevalence of fuel import deals that involve cheap, low quality Iranian fuel that is transshipped via the United Arab Emirates or Oman before arriving to Yemen, where the fuel is then sold on the local market at a hefty markup. These deals, like all other fuel shipments to Houthi-controlled ports, are effectively agreed in Sana’a and signed off on in Riyadh.

The plot thickens further still when it comes to financial flows and external money transfers. To pay fuel exporters and brokers located outside Yemen, certain Yemeni fuel importers – particularly those that have risen in clout since 2016 – have turned to informal financial networks, and specifically the services provided by money exchangers. Fuel importers desperate to get their hands on foreign currency at any price are thought to be among the biggest factors depressing the rial’s value, which is in turn the primary catalyst for the spreading famine.

The new business elite and the informal financial networks that aided their rise appeared to come under threat recently, owing to new food and fuel import regulations that the Economic Committee introduced in September 2018 under the authority of the Central Bank of Yemen (CBY) in Aden. Early indicators suggest, however, that these regulations have simply forced an adaptation to new forms of business relations and activity. Partnerships are being formed amongst importers that can meet the necessary requirements and those that cannot. The fact is that the more profitable Yemeni markets are in Houthi-controlled areas, where an estimated 70 percent of the population resides. Those seeking to profit from this war have proven themselves adept at working around new restrictions. This is how the war economy has evolved to where it is today.

In September 2018, UN Special Envoy Martin Griffiths declared his intention to place greater emphasis on addressing Yemen’s economic crisis, acknowledging the direct, catastrophic impact that Yemen’s economic decline is having on the lives and livelihoods of Yemeni people. This declaration, which occurred at a time in which the local currency was in an unprecedented free fall, is undoubtedly a step in the right direction. What is also needed, however, is a greater emphasis on identifying the key figures on all sides who are profiting from this war, the networks through which their finances flow, and the points of leverage that can be brought to bear upon them. Without reining in the influence of the war profiteers, the chances of achieving peace are grim.

 

For more details, please see The Yemen Review – November 2018